Here's something we don't like

by francine Hardaway on December 13, 2005

Here’s something we don’t like to think about: at some time in our lives we
will all be customers of the health care industry. And yes, much as we like
to think of nuns running hospitals and Marcus Welby making house calls,
health care is an industry, becoming more so every day. In Arizona alone, health care is a $30 billion industry in which everyone wants to increase revenue and decrease costs. The problem is that somebody’s cost is somebody else’s revenue. And if you are a patient, somebody’s cost containment is your decreased access to care. Health care is an industry that is putting out a luxury, high end product very few of us are able to afford.

And that’s beginning to piss us off. Part of the problem is that although health care is a bona fide industry, it’s also one in which 85% of hospitals are still “non profit” and close to 60% of the entire health care product is financed by public revenues. That’s because although health care operates on margin just like any other industry, there is also the competing demand of its mission. Market discipline and market models applied to health care often conflict with the traditional mission of keeping everyone alive and well for as long as possible.

Everybody wants unfettered access to health care and the latest technology.
Consumer demand is going to increase in the next decades, and that is either
going to usher in the new world of personalized medicine or break the

Nobody wants to pay more. Nobody wants to lose, but there is little
agreement about the best division of labor between the public and private
sector. The biggest dilemma is that, when polled, Americans say they want universal health care, but they’d rather shift costs behind the scenes than participate in a socialized system that would mean higher taxes and government subsidies. This means health insurance costs go up for the insured, and companies like General Motors are threatened with bankruptcy.

Last week I went to the St.Luke’s Health Initiatives Forecast, and here’s the sad truth:

Employer-based insurance will continue its gradual erosion.
Public insurance will continue to increase (ACCHHS)
The uninsured will continue to increase relative to population growth and
will remain at 19% of the population
Costs will continue to rise
Consumers will have to pay an increased share of their health care costs
Insurance premiums are costing up to 20% of take home pay.
While there is huge demand for hospital care in Maricopa County, hospitals
deliver hundreds of millions of dollars in uncompensated care. That’s not
only charity care, but insured people who can’t afford to pay their portion
of the bill for a catastrophic illness. Long term, the future for hospitals
is problematic.

Salaries, for the first time in a while, are up for physicians. But only for
certain specialties. There has been a gradual decline in primary care
physicians that mirrors almost exactly what is seen in other industries as
they mature: what used to be done by highly trained people (physicians) is
now delivered by less trained people (nurse practitioners, physician
assistants). Primary care is now delivered mostly by physician extenders.
And people entering medical college today are interested in a “balanced
lifestyle” rather than the total dedication to service of previous
generations. Many physicians take part-time employment and salaries instead
of going to into practice for themselves, especially in rural areas.

Health plans are experiencing declining margins and are under pressure to
consolidate. In order to survive, they will have to get into the information
business and out of the insurance business — they will have to become
experts in disease management to contain the costs of the 10% of the
population that takes up 70% of the health care dollar.

This will involve more collaboration and trust to develop databases. The
technology exists to automate most of health care, but it’s limited by the
concepts of ownership. Who owns aggregated health care data?

Arizona citizens believe that employer-based health care isn’t viable long
term, and that everyone should be insured and no one should get a free ride. A lot of these beliefs are paradoxical.

These trends are all part of the continuing industrialization of health
care. It’s a product we don’t like mass-produced, but can’t afford as a luxury. Now what?

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